ANSYS Reports Record Fourth Quarter and Annual Results Driven by Organic Revenue Growth
Thursday February 21, 7:30 am ET
Company Announces Increase to 2008 Outlook
SOUTHPOINTE, Pa., Feb. 21, 2008 (PRIME NEWSWIRE) -- ANSYS, Inc. (NasdaqGS:ANSS - News), a global innovator of simulation software and technologies designed to optimize product development processes, today reported its fiscal fourth quarter and full year 2007 results.
We are pleased to report the strongest quarterly and annual performance in our Company's history, including our first quarter of over $100 million in revenue,'' commented ANSYS President & CEO Jim Cashman. ``With solid contributions from all aspects of our business, we exceeded our growth and profitability plans for both the fourth quarter and for the year. By focusing on maximizing the strengths and opportunities that the combination of ANSYS and Fluent presented, we were able to fuel our investments in research and development, sales and marketing, and our global infrastructure. As a result of these efforts, we have the broadest, deepest and most integrated product offerings in our history. Our comprehensive Multiphysics capabilities and scalability have clearly established us as the leader in engineering simulation.''
ANSYS' fourth quarter and full year 2007 financial results are presented below. The non-GAAP results exclude the income statement effects of stock-based compensation, purchase accounting for deferred revenue and acquisition-related amortization of intangible assets. The 2006 full year results also exclude a one-time charge related to in-process research and development associated with the acquisition of Fluent.
Non-GAAP and GAAP results reflect:
* Total non-GAAP revenue of $111.2 million in the fourth quarter
of 2007 as compared to $90.4 million in the fourth quarter of
2006; total non- GAAP revenue of $387.2 million in 2007 as
compared to $282.0 million in 2006; total GAAP revenue of $111.2
million in the fourth quarter of 2007 as compared to $85.2
million in the fourth quarter of 2006; total GAAP revenue of
$385.3 million in 2007 as compared to $263.6 million in 2006;
* A non-GAAP operating profit margin of 43.2% in the fourth
quarter of 2007 as compared to 38.1% in the fourth quarter of
2006; a non-GAAP operating profit margin of 43.3% in 2007 as
compared to 38.7% in 2006; a GAAP operating profit margin of
34.1% in the fourth quarter of 2007 as compared to 23.4% in the
fourth quarter of 2006; a GAAP operating profit margin of 32.9%
in 2007 as compared to 13.7% in 2006;
* Non-GAAP net income (see *Note below) of $36.0 million in the
fourth quarter of 2007 as compared to $21.5 million in the
fourth quarter of 2006; non-GAAP net income of $109.0 million in
2007 as compared to $70.7 million in 2006; GAAP net income of
$29.3 million in the fourth quarter of 2007 as compared to GAAP
net income of $12.3 million in the fourth quarter of 2006; GAAP
net income of $82.4 million in 2007 as compared to GAAP net
income of $14.2 million in 2006; and
* Non-GAAP diluted earnings per share (see *Note below) of $0.44
in the fourth quarter of 2007 as compared to $0.27 in the fourth
quarter of 2006; non-GAAP diluted earnings per share of $1.34 in
2007 as compared to $0.92 in 2006; GAAP diluted earnings per
share of $0.36 in the fourth quarter of 2007 as compared to GAAP
diluted earnings per share of $0.15 in the fourth quarter of
2006; GAAP diluted earnings per share of $1.02 in 2007 as
compared to GAAP diluted earnings per share of $0.19 in 2006.
* Note: The GAAP and non-GAAP net income and earnings per share data for 2007 presented above include approximately $3 million, or $0.04 per share, in tax benefits during the fourth quarter of 2007, primarily related to (1) reductions in the Company's accrual related to uncertain tax positions associated with the filing of voluntary disclosure agreements in various state taxing jurisdictions, (2) reductions in the Company's U.S. net deferred tax liabilities associated with the merger of two U.S. legal entities, (3) a favorable adjustment to the Company's previous estimate for taxes owed in a foreign jurisdiction as a result of the completion of the related tax filing and (4) reductions in certain deferred tax liabilities in foreign jurisdictions related to prospective income tax rate changes adopted by the foreign jurisdiction.
The Company's GAAP results reflect stock-based compensation charges related to SFAS No. 123R, ``Share-Based Payment,'' of approximately $2.5 million ($2.1 million after tax), or $0.03 diluted earnings per share, for the fourth quarter of 2007 and approximately $8.9 million ($7.4 million after tax), or $0.09 diluted earnings per share, for 2007.
The non-GAAP financial results highlighted above and the non-GAAP financial outlook for 2008 discussed below represent non-GAAP financial measures. A reconciliation of these measures to the appropriate GAAP measures, for the three months and twelve months ended December 31, 2007 and 2006 as well as the 2008 financial outlook, is included in the condensed financial information included in this release.
Continuing his comments, Cashman noted, ``We began 2007 with strong business and customer momentum and are pleased that we were able to leverage that momentum throughout the year to close out the fourth quarter with double-digit growth in all major geographies. Our focus on innovation, simulation and transformation is enabling us to solve our customers' emerging and ever more complex problems, fueling the demand for our products and increasing our opportunities for further penetration in all major industry segments.''
Cashman concluded by saying, ``As we enter 2008, we are very encouraged by the positive adoption levels we are experiencing and believe we have a very strong foundation for continued, long-term growth and financial success. While we are increasing our outlook for the year, we are also cognizant of the uncertainties relative to the current volatility in the capital markets, as well as concerns about economic slowdowns in certain major geographies. We believe we are well positioned to invest in and capitalize on the global market opportunities for growth and to leverage our extensive customer base, strategic vision, technology leadership, and solid business model to drive continued technological and operational excellence.''
Management's Remaining 2008 Financial Outlook
The Company has provided its 2008 revenue and earnings per share guidance below. The earnings per share guidance is provided on both a GAAP basis and a non-GAAP basis. Non-GAAP diluted earnings per share excludes charges for stock-based compensation and acquisition-related amortization of intangible assets.
As required by SFAS No. 123R and guidance issued by the Securities and Exchange Commission, the Company records expenses and tax benefits related to stock-based compensation. As a result, the GAAP estimates for earnings per share provided below reflect the anticipated impact of stock-based compensation. The Company issues both nonqualified and incentive stock options; however, incentive stock options comprise a significant portion of outstanding stock options. The tax benefits associated with incentive stock options are unpredictable, as they are predicated upon an award recipient triggering an event that disqualifies the award and which then results in a tax deduction to the Company. GAAP requires that these tax benefits be recorded at the time of the triggering event. The triggering events for each option holder are not easily projected. In order to estimate the tax benefit related to incentive stock options, the Company makes many assumptions and estimates, including the number of incentive stock options that will be exercised during the period by U.S. employees, the number of incentive stock options that will be disqualified during the period and the fair market value of the Company's stock price on the exercise dates. Each of these items is subject to significant uncertainty. Additionally, a significant portion of the tax benefits related to disqualified incentive stock options is accounted for as an increase to equity (additional paid-in capital) rather than as a reduction in income tax expense, especially in the periods most closely following the adoption date of SFAS No. 123R. Although all such benefits continue to be realized through the Company's tax filings, this accounting treatment has the effect of increasing tax expense and reducing net income. For example, the Company realized a tax benefit of $4.5 million during 2007 related to disqualified incentive stock options; however, only $243,000 of such amount was recorded as a reduction in income tax expense. Because there are significant limitations in estimating the impact of SFAS No. 123R, including those discussed above, the actual impact of stock-based compensation on GAAP earnings per share may differ materially from the estimated amounts included in the guidance below.
First Quarter 2008 Guidance
The Company currently expects the following for the quarter ending March 31, 2008:
GAAP revenue in the range of $103 - $106 million
GAAP diluted earnings per share of $0.24 - $0.26
Non-GAAP diluted earnings per share of $0.33 - $0.34
Fiscal Year 2008 Guidance
The Company currently expects the following for the fiscal year ending December 31, 2008:
GAAP revenue in the range of $442 - $447 million
GAAP diluted earnings per share of $1.12 - $1.19
Non-GAAP diluted earnings per share of $1.48 - $1.51
Non-GAAP diluted earnings per share is a supplemental financial measure and should not be considered as a substitute for, or superior to, diluted earnings per share determined in accordance with GAAP.